Tier 2 - Costs on the Cards for Sponsors?

On 19 January 2016 the Migrant Advisory Committee (‘MAC’) published its recommendations to tighten up the Tier 2 visa route. This follows the brief consultation period over the summer. Immigration remains an emotive topic high on the political agenda. These recommendations are key and give a clear signal that UK employers of Tier 2 workers will need to be prepared for change.

The recommendations include:

An increase to the existing minimum salary threshold for all Tier 2 workers from £20,800 to £30,000

The introduction of an upfront Skills Charge of £1,000 per year, per Tier 2 worker to be paid by the employer

The introduction of a separate Tier 2 intra-company transfer route to tackle third-party contracting – usually where firms import staff on inter-company transfers to service contracts that they have won – with an increased salary threshold of £41,500.

These particular proposals have the clear aim of making the Tier 2 route more selective and prioritising highly skilled and specialist staff. There is also a firm financial disincentive to employers considering the cost of hiring migrant workers, perhaps aimed to reach where the Resident Labour Market Test (RLMT) has not already.

However, whilst the desire to up-skill the domestic labour market is admirable it will not happen overnight. In the short term, financial planning is necessary. If these recommendations are borne out, it seems that the potential cost impact of these reforms will need to be met head on by employers, particularly in sectors with a heavy reliance on migrant skills.